J.C. Hutton Pty Ltd v Darling Downs Co-Operative Bacon Association

[1988] FCA 780

C A T C H W O R D S

PRACTICE - claim and cross-claim - separate trials.

PRACTICE - discovery - application for further discovery - going

behind affidavit of documents.

PRACTICE - discovery - information stored on computer disks -

whether discoverable - group companies - common data base - whether within "possession, custody or power".

Federal Court Rules 0.15	r . 8
J.C. Hutton Pty Ltd

v.   Darling Downs Co-operative Bacon Assocation

qld G192 of 1987

PINCUS J.

BRISBANE

'19 DECEMBER 1988
IN THE FEDERAL COURT OF AUSTRALIA	)
QUEENSLAND DISTRICT REGISTRY	) OLD G192 Of 1987
GENERAL DIVISION	)

BETWEEN:  J.C. HUTTON PTY LTD

Applicant

AND :  DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION
LIMITED

Respondent

AND :  DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION
LIMITED

Cross-Claimant

AND :  J.C. HUTTON PTY LTD

First Cross-Respondent

AND :  TANCRED BROS PTY LTD

Second Cross-Respondent

AND :  FRED PAUL (MERRYLANDS) PTY LTD

Third Cross-Respondent

MINUTES OF ORDER

MAKIN	JUDGE	ORDER:	PINCUS J.
DATE OF ORDER:	DECEMBER	1988	19
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.     all the evidence in support of and in answer to the claim against the third cross-respondent be called at the trial before any other evidence in the case:

2. the costs of the third cross-respondent's motion

filed on 5 December 1988 will	be the costs of the
third cross-respondent	in the proceedings brought

by the respondent and cross-claimant against it;

3 .     there be no order, as for the motion, with respect to the costs of the other cross-respondents;

4 .     the applicant and the second cross-respondent make

further discovery with respect o information

accessible by computer;

5 . the applicant make further discovery with respect
to the matters mentioned in paragraph 9(h) of the
affidavit of Mr Carter filed on 13 December 1988;

6 .     the applicant make an affidavit by way of further

discovery with respect to the book mentioned in
paragraph 9 ( j ) of the affidavit of Mr Carter filed on 13 December 1988;
l .	the whole costs of the application for further
discovery by the applicant and second
cross-respondent on the one hand, and by the
res ondent on the other, be the costs of the
app icant and of the second cross-respondent ? in the

proceedings;

8.    as to the costs of the hearing on 8 December 1988, those costs be costs in the proceedings;

9. as to the costs of the hearing on 24 November 1988,

those costs be costs in the proceedings;

1 0 .	the transcript of the hearing on 16 December 1988
be produced as soon as practicable and made
available to the parties on the usual basis.

NOTE :  Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY	OLD G192 of 1987
GENERAL DIVISION

BETWEEN:  J.C. HUTTON PTY LTD

Applicant

AND :  DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION
LIMITED

Respondent

AND :  DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION
LIMITED

Cross-Claimant

AND :  J.C. HUTTON PTY LTD

First Cross-Respondent

AND :  TANCRED BROS PTY LTD

Second Cross-Respondent

AND :  FRED PAUL (MERRYLANDS) PTY LTD

Third Cross-Respondent

PINCUS J. 19 DECEMBER 1988

REASONS FOR JUDGMENT

On Friday some interlocutory applications came befofe me

and they were, except in two important respects, dealt with	by
orders made during the hearing. These reasons deal with the two
matters which are	left.

1.   Application by Third Cross-Respondent

Fred Paul (Merrylands) Pty Limite d see !ks an OK, der that

the respondent's claim against it be heard separately from the rest of the case. That is not opposed by the other parties, but

counsel for the respondent and cross-claimant have argued that if

the order is made, then the claim against the hird

cross-respondent should be heard immediately before the rest of

the case. That is there should not be a gap.

The case appears to me to be a fairly complex one, so

far as it concerns the issues between the applicant and

respondent. The claim against the third cross-respondent is

simply one of misleading and deceptive conduct in that (so it is

said) the third	cross-respondent represented	a business to	be
carried on	by it	for its	own benefit, when in fact the business

has been carried on on behalf	of	the second cross-respondent.
Damages are claimed.

On the face of it, the claim against he third

cross-respondent is quite separate from the other issues in the

case.	However, in my opinion, in practice the issues may overlap
somewhat.	This was illustrated by an aspect of the dispute about

discovery, which dispute is discussed in some detail below. The respondent has obtained from the third cross-respondent by way of discovery documents suggesting that the third cross-respondent may be closely connected in business with the second cross-respondent.

The respondent has complained that neither the applicant	nor the
second cross-respondent has made discovery	of such documents.

Putting that point more generally, it seems to me

probable that the evidence relating to the issues between the

other parties may throw some light on the claim against the	third
cross-respondent.

Mr Sofronoff Q.C., for the third cross-respondent,

suggests that two advantages to that party would flow from the

making of such an order	as has been sought: firstly, he said	in
effect that	if the claim against the	third cross-respondent were
heard separately,	it	could come on fairly soon and perhaps well

before the rest of the case, and secondly he said, that separating

the cases in the way suggested would relieve the third

cross-respondent of the necessity of having counsel present during

the whole of a case said to be likely to take months.

In my opinion, there is more substance in the second

point than in the first.	I do not see this as a case in which it
is likely to be practicable for the Court to	determine and give

judgment in the claim against the third cross-respondent before

hearing the rest of the case.	Should it turn out that some other
evidence given in the case later happens to impinge upon the claim	against the third cross-respondent, judgment not having been given
on that claim, suitable orders could perhaps be made, if the Court saw fit, for the re-opening of the case against or defence by the third cross-respondent. However, since the respondent makes no
objection and it seems to me likely to be convenient, I shall
order that all the evidence in support of and in answer to the
claim against the third cross-respondent be called at the trial

..

4 .

before any other evidence in the case.

That is, I am acceding to the view of the matter which

was put forward by Mr Griffin Q.C. in declining to make an order

designed to produce the result that the cases would be heard

separately. It should be added that the claim against the third

cross-respondent seems a rather unusual one, but I say no more on

that subject, since no attack has been made upon its legal

foundation.

The costs of the third cross-respondent's motion will be the costs of the third cross-respondent in the proceedings brought

by the respondent and cross-claimant against it.	There will be no
order, as for the motion,	with respect to the costs of the other
cross-respondents.
2. Discovery

The second matter or, rather, category of matters left

undealt with is the collection of complaints by the respondent

concerning discovery. Speaking generally, what the respondent

says is that it is against all the probabilities that complete
discovery has been given to it and, again speaking generally, the

answer made is that whatever the probabilities may seem to be, the

Court cannot or should not go behind the oath that complete

discovery has been made. Reliance was placed on Mulley v.

Manifold (1959) 103 C.L.R. 341 at 343 and there are, of course,

other cases of that sort. Mulley v. Manifold is authority for the

..

5 .

view under the then 0.32 r.18 in the High Court Rules, permitting an application for further discovery "based upon the filing of an

affidavit that there have been particular undiscovered documents

... " The general rule that the affidavit of documents is

conclusive, still survived except to the extent that it was

specifically abrogated by the rule. Mulley v. Manifold does not,

however, provide any guidance as to the construction of the

corresponding rule in this Court, which is 0.15 r . 8 and is rather

different.

That rule provides that where "it appears to the Court

from evidence or from the nature or circumstances of the case or

from any document filed in the proceeding that there are grounds

for a belief that some document or class of document relating to any matter in question in the proceeding may be or may have been

in the possession, custody	or power of a party, the Court may
..." order further discovery.

As Menzies J. explained in Mulley v. Manifold it used

once to	be thought that the insufficiency	of discovery had to
appear "from	the pleadings, the affidavit of documents itself	or

the documents therein referred to". That is not so in this Court.

Here, there does not seem to be any presumption that an affidavit

of documents is complete. Any such presumption was always a

fiction, at least in a case of any complexity; almost inevitably

in such cases, documents are missed in the first attempt at

discovery and further there is likely to be room for honest

controversy as to whether a particular document or group of

documents is discoverable.

Here, the claim for further discovery depends on the

affidavits of Mr B.R. Carter, a member of the firm which has the

conduct of the matter on behalf of the respondent. Before coming

to the details, one general point should	be mentioned. It appears
that both sides have given discovery on the basis	that information

stored on computer disks	or	otherwise in such a form as to	be
accessible by computer	only is not	discoverable.	For reasons

already given, that assumption is incorrect.

In my opinion, the inclusion of computer information

within the scope of discovery could make quite a substantial

difference to the volume of information required to be produced, in the case of discovery by a party which is a member of a group of companies.

It seems to me not uncommon for a group to have a common

data base accessible by all the companies in the group. Insofar

as the information held in the central data base	is accessible by
the companies in the group generally,	it would seem to be in their

"possession, custody or power" within the meaning of 0.15 r.6(2).

This is not to say, of course, that all the information must be

disclosed: only that which is, to put it broadly, relevant must be
discovered.

In view of the wrong assumption which has been made as to the discoverability of computer information, it is necessary to order that the applicant and the second cross-respondent make

further discovery with respect to information accessible by

l .

computer, and I will so order.

It is conceivable that further discovery ordered as is

indicated will meet some of the objections the respondent has made

to the discovery so far given; nevertheless,	it is necessary to
deal with those objections.

(i) The respondent has produced ocuments headed "Tancred

Brothers Group", which seem to be discussions of the

financial affairs of the third cross-respondent of a kind

which one might expect find to if the ird

cross-respondent were m mber a of that group. The

documents were not discovered by the applicant or the

second cross-respondent. An affidavit has been filed on

their behalf saying that such documents are not in their

possession or power.

I see nothing incredible about that. It would seem

unlikely that no Tancred Company has copies of	the memos in
question, but it may be that	a company in the group other
than the second cross-respondent has them.	More generally,

it may be that documents of the sort whose absence is

complained of, relating to the "takeover" of the business

in question by the third cross-respondent are held by

another Tancred Company. Of course, if they are accessible

by the applicant or the second cross-respondent, they must
be discovered. However, I can see no ground for finding
that discovery is in this respect is incomplete.

( i i ) A complaint is made about absence documents of

reflecting the directorship of one Michael Kent and again,

there is no ground for further discovery.

(iii 1 It is said that the third cross-respondent is interested

in the company known as Northern Meat Exporters Pty

Limited, which is connected with the applicant. All that

seems to be known is that Northern Meat Exporters Pty

Limited	owes	a great	deal	of money	to	the	third
cross-respondent,	and	that	they	have	the	same	address.

This does not, in my opinion, establish that there are any relevant documents undiscovered.

The solicitor acting in this case on behalf of the

applicant	and	the	second	cross-respondent	conducted	a
search	relating	to	the	third	cross-respondent	shortly

before it began business of the kind complained of in these

proceedings. Discovery of the solicitor's file is sought.

The affidavit on behalf of the applicant and second

cross-respondent says that all documents in the file which

are relevant and discoverable have been discovered.

I must say I find that rather puzzling. If any

documents in the file were discoverable, it is hard to see how it could ever be that some are not. That is, if the

then activity on behalf of the solicitors had anything to

do with this case, one would assume it to be likely that

the documents in the file would be all relevant. However,

again, there is no basis for a further order for discovery.

( V ) Complaint is made of the absence of personnel records.

It appears that when the third cross-respondent began

business, it took over the existing employees. The answer

to the complaint says that a further search has been made,
but no order for further discovery is justified.

(vi)      It is said that complaints as to the quality of goods

produced by the applicant insofar as they relate to goods

like those produced under the agreement mentioned	in	the
pleadings should be discovered.

The answer made in the affidavit on that point is

unsatisfactory. It is general and uninformative.

It appears to me that, as Nr Griffin says, if

information as to the level of complaint of the kind

mentioned may bear upon the issues in the case, it may be that to make full discovery would be burdensome; if so, an application may be made to vary the order. It seems to me,

however, the proper course	is to require further discovery
with respect to the matters mentioned in paragraph 9(h) of
the affidavit of MC Carter filed on	13 December 1988 and it
will be so ordered.

(vii) There is complaint of absence of discovery of documents

relating to breaches alleged in the pleadings. In my

opinion here, it is correct, as the applicant says,	that
this complaint is too general, and it must be rejected.

,

10.

(viii) The solicitors for the third cross-respondent have

written a letter dated 7 December referring to "a book kept

by Tancred" concerning management services. The answer

given to a complaint about non-discovery of this is that a search has been conducted "to ascertain whether such book ever existed and that no such book has been located".

It may seem pedantic, to say so, but the answer does not

quite suffice. There being substantial reason to think

that a relevant book exists, an affidavit by way of further
discovery should be made and it will be so ordered. Of

course, if the book was once in possession or power, but

has been lost, that must be stated.

There are other complaints of a general character, which

do not require specific treatment.

I reserved the costs of the applicant's motion for

further discovery which was dealt with on Friday, with the	idea of
dealing with all the costs relating to further discovery	or rather

the applications for further discovery in one order. That can

only be done broadly.	I have the impression that the applicant's
performance with respect to discovery has been better than	that of

the respondent. On the other hand, the respondent's task when

giving discovery seems to	me inherently more difficult than that
of the applicant.
Looking at the degree of each party's success in these two applications for discovery, it appears to me that	I should

order that the whole costs of the application for further discovery by the applicant and second cross-respondent on the one hand, and by the respondent on the other will be costs of the

applicant and of the second cross-respondent in the proceedings.

(Submissions - not transcribed)

I will indicate hat ny further interlocutory

applications should be brought before MC Justice Hartigan.

(Submissions - not transcribed)

I will make the costs of the abortive hearing on 8

December part of the costs of the	proceedings	which	were
ultimately heard on 16 December 1988.

(Submissions - not transcribed)

As to the costs of the hearing on 24 November 1988, I

will make those costs, costs in the proceedings.

(Submissions - not transcribed)

I will vacate the order which I made with respect to

costs of 8 December, and instead I will make those costs also

costs in the proceedings, on the ground that it was simply as an

administrative matter impracticable to deal with the case on	8
December.

. 12.

Mr. Justice Pincus A14fy& L L W

'pssociate